Finance department gives Council an Operating budget with a 4.19% increase over last year.

Budget 2018 ICONBy Pepper Parr

December 3rd, 2017

BURLINGTON, ON

 

Budget time.

City staff presented an Operating budget with a 4.19 % increase over last year – this will be the xx year that tax payers have seen increases in the 4% range.

Future tax

The disturbing part of this budget is the prediction going forward for increases that are wll above inflation at a time when the economy is very healthy. The line that is solid yellow is the one that tax ayers need to focus on

The proposed net tax levy for the 2018 fiscal year for the Operating budget will amount to $159,855,656. Staff propose that Council approve this amount on January 22, 2018.

Staff did a line-by-line review of the base budget and found $600,000 in savings.

James Ridge

City manager James Ridge.

The strategic review of the Operating Budget is done by a Leadership Team comprised of the City Manager, Director of Finance, Director of Human Resources. The Director of Planning and Building and the City Clerk took part as rotating member.

The following were events that impacted the Operating budget:

The estimated impact from legislative changes to the Employment Standards and Labour Relations Acts (Bill 148) of $1 million results in an additional tax increase

The annualized impact of changes made within the Transit Service to provide operational sustainability of $1.3 million results in an additional tax increase

Impacts from the 2014 arbitrated Fire settlement of $1.2 million results in an additional tax increase

The increase for the dedicated infrastructure levy of $1.9 million results in an additional tax increase

A business case to increase maintenance standards on city sports fields for $320K

Where the money gets spent

Where the money gets spent

These events plus the base budget already in place result in a total tax increase to 4.19%.

The following table provides a breakdown of the city’s tax increase.

Tax impacts from budget croppedThe cost increases put upward pressure on the budget; more money going out. The lower than anticipated assessment growth meant less money coming in. The difference between those two numbers is found in the pockets of the tax payers.

Spicer + Ridge

Former Director of Transit Mike Spicer sitting with city manager James Ridge – the facial expressions tell the story. Spicer resigned several months later.

Council learned on September 7, of the “challenges facing the department’s operations”. Those challenges are going to add s approximately $1.3 M to the proposed 2018 budget.

Municipalities are service organizations that rely heavily on human resources to deliver the range and quality of services that residents have come to expect. Human resource costs (including benefits, training, etc.) as a percentage of the City’s gross budget has changed from 50.5% in 2004 to 46.2% proposed for 2018.

Local Boards include the Burlington Public Library, Burlington Museums, Art Gallery of Burlington, Burlington Performing Arts Centre (BPAC), Tourism Burlington and the Burlington Economic Development Corporation (BEDC). For 2018 a base budget increase of 2.0% was provided for local boards, equating to $295,910.

The city continues to make good progress on its infrastructure renewal needs as Council has provided Predictable Infrastructure Investment, in the form of a dedicated incremental infrastructure levy. The proposed budget includes a 1.25% ($1.9 million) levy as recommended in the city’s Asset Management Financing Plan.

A recent review of the Vehicle Depreciation Reserve Fund (VDRF) recommended that the annual contributions to the reserve fund be increased from 3% to 4% per annum to ensure long-term financial sustainability. This increased contribution has an incremental $32,000 ongoing impact to the operating budget.

The city revenues in 2018 will, in part come from the following increases:

• increase in registration fee and rental revenues of $181,000 to reflect increased volume of participants as well as increases to fees

• increase in Building Permit fees of $186,000 to reflect an increase in the costs to administer enforcement of the Building Code (Bill 124)

• increase in Development Application and Approval Processing (DAAP) fees of
$140,000 to reflect an increase in volume and a 2% increase in fees

• increase in parking fines of $215,000 and daily parking revenues of $150,000 to better align with historical revenue trends

• increase in Transit advertising revenues of $170,000 as a result of a new advertising contract.

How budget gets done

The process for putting a city budget together.

A tax bill doesn’t always translate into cash in the city coffers. The city budgets annually for tax write-offs based on assessment reductions or property class changes agreed to by MPAC and/or the Assessment Review Board (ARB).

Annual write-offs have traditionally been approximately $1 million. In 2017 write-offs are estimated to total $2 million due to continued processing of longstanding appeals being resolved by the ARB. These write-offs have depleted the allowance account which will require a provision to be made at year-end as part of the retained savings. The budget for write-offs has been increased by $50,000 to $1.175 million.

These growth costs and other inflationary increases have been offset by assessment growth which allows a municipality to finance increased costs without increasing taxes.

Over the past five years Burlington’s weighted assessment growth was:

2013 0.87%
2014 0.58%
2015 0.97%
2016 1.16%
2017 0.15%

Staff continue to believe a portion of this is one-time in nature.

Paradigm from the west Nov 2017

The first of the five tower Paradigm on Fairview will begin to be occupied in 2018 – adding to the tax roles.

There are three major projects under construction that will be at least partially completed in 2018 – with people moving in – tax get levied and assessment growth improves.

The 2017 Approved Budget included $200,000 to implement the first phase of the Enhanced Sportsfield Maintenance Strategy. Included with the 2018 budget is a business case to provide the remaining funding requirements of $320,320 and 3.2 FTE to fully implement this strategy. This business case aligns with the city’s Strategic Direction of a Healthy and Greener City. It will result in improved turf resilience and playability as well as demonstrates environmental leadership and stewardship of our natural assets.

Services

Services the city provides.

The proposed city increase of 4.19%, for urban residential taxpayers translates into a tax increase of $21.03 for each $100,000 of residential assessment.

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1 comment to Finance department gives Council an Operating budget with a 4.19% increase over last year.

  • Stephen White

    Absent those earning minimum wage who are scheduled to get a substantial increase come January 1, 2018, I wonder how many other Burlington residents will be getting anything close to a 4% wage increase next year? Not many I suspect. Certainly not seniors or persons on a fixed income. Yet, City Hall mandarins propose a 4.19% increase and everyone is expected to blithely acquiesce.

    Instead of focusing on the revenue side of the balance sheet perhaps James Ridge should be invited to report on what cost savings measures and economies he is proposing in 2018.